Unemployment Insurance

The unemployment insurance system involves a complex network of coordinated state and
federal programs. The Federal Unemployment Tax Act (FUTA), implemented as part of the
Social Security Act of 1935, imposed a uniform federal tax on the payrolls of industrial
and commercial employers who employed eight or more employees for at least 20 weeks per
year. Employers that paid a tax to a state-level unemployment insurance program could
offset up to 90 percent of the state tax against the federal tax.

The Employment Security Amendments of 1970 and the Unemployment Compensation Amendments
of 1976, both federal laws, broadened this coverage to include all private employers in
industry and commerce who employ one or more individuals for at least 20 weeks during the
current year or who pay $1,500 or more in wages and salaries during any calendar year.
Agricultural and domestic employees face slightly modified eligibility standards.
Eligibility for benefits is determined by an unemployed worker's previous attachment to
the labor force as evidenced by a specified amount of work or earnings in covered
employment and by the unemployed worker's ability and willingness to work.

The unemployment rate in the United States for the first quarter 1997 was 5.3 percent.
By May 1997, the national unemployment rate moved down slightly, to 4.8 percent.

The unemployment rate varies by state. The states with the highest unemployment rate in
May 1997 were: Alaska, 6.9 percent; District of Columbia, 6.8 percent; and California,
Louisiana, New Mexico, and New York, 6.3 percent. States with the lowest unemployment rate
were: Nebraska, 2.3 percent; South Dakota, 2.6 percent; New Hampshire, 2.8 percent; and
Iowa and Utah, 3.0 percent.

Compared with other industrialized countries, only Japan has a lower unemployment rate
than the United States. As of first quarter 1997, the unemployment rate in the United
States was 5.3 percent, compared with 3.3 percent in Japan. Unemployment rates in other
industrialized countries were: Canada, 9.6 percent; Australia, 8.7 percent; France, 12.8
percent; Germany, 7.8 percent; Italy, 12.3 percent; Sweden, 10.6 percent; and the United
Kingdom, 7.5 percent.

In 1995, 92,322,409 workers were covered by the unemployment insurance system in the
United States. Also in that year 8,035,229 workers received their first benefit payment,
and 2,661,773 workers exhausted their benefit allowance.

Thirty-four percent of first time claimants exhausted their benefit allowance in 1995.
States with the highest percentage of claimants exhausting their benefit allowance were:
the District of Columbia, 51.7 percent; New Jersey, 46.6 percent; and Texas, 44.9 percent.
The states with the lowest percentage of claimants exhausting their benefit allowance
were: South Dakota, 11.0 percent; New Hampshire, 15.1 percent; and North Carolina, 15.7
percent.

The national average duration, in weeks, of an individual receiving unemployment
benefits was 14.7. The states with the longest average duration were: the District of
Columbia, 19.8 weeks; Carolina, 8.4 weeks; Alabama, 9.2 weeks; and Georgia, 9.4 weeks.

The average weekly benefit in the United States was $187.29 in 1995. The states with
the highest average weekly benefit were: Hawaii, $270.03; New Jersey, $252.63; and
Massachusetts, $244.40. The states with the lowest average weekly benefit were: Louisiana,
$121.38; Mississippi, $134.06; and Alabama, $138.51.